Sterling Rallies as “Brexit” Fears Wane – Westpac
Research Team at Westpac, suggests that the British pound was easily the weakest G10 currency in Q1 as UK PM Cameron confirmed 23 June as the date for the UK to vote on whether to stay in the European Union.
“Markets priced in political risk on sterling, as they did ahead of the Sep14 Scottish referendum and May15 election.
We had been expecting the pound to remain an underperformer until the day of the referendum, when we expected a “remain” vote and subsequent GBP rebound. But sterling has been the G10’s strongest currency so far in May as opinion polls have swung more decisively against “Brexit.” The pound has bounced in line with the probability of the status quo being maintained. The worst has probably passed for the pound.”